Toronto West Development Corporation TWDC purchased land not far from the intersection of Bloor Street West and Kipling Avenue. The top managers of TWDC , however, have different opinions on how this land can be used. Eventually, TWDC commissioned preliminary architectural drawings for three different projects: High-Rise Condo; Mid-Rise Apartments; Retirement Homes. Also, it is recognized that the financial success of the project depends on the situation on the real estate market, Strong Demand or Weak Demand.The TWDC expectations are summarized in the following table (payoffs are in$$millions).

Decision Alternatives	States of Nature
Strong Demand	Weak Demand
High-Rise Condo	10	8
Mid-Rise Apartments	15	5
Retirement Homes	25	-10

Originally, TWDC specialists counted on 0.64 probability of strong demand.

Simple Decision Tree Part

(a) Suppose that you need to construct a simple decision tree that shows the logical sequence of the decision problem. Select the correct sketch of the decision tree based on the information above.

NotethatP(S)=probability of strong demand,P(W)=probability of weak demand. Also, we use the following notations:

P₁=Payoff 1, P₂=Payoff 2, P₃=Payoff 3, P₄=Payoff 4, P₅=Payoff 5, P₆=Payoff 6.

• P(S)=0.64P(S)=0.64,P(W)=0P(W)=0, P1=10P1=10,P2=8P2=8,P3=15P3=15,P4=5P4=5,P5=25P5=25,P6=?10P6=-10
  

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